Chicago’s affordable housing crisis can be fixed without tax hikes

Chicago housing affordability is among the lowest in the Midwest, driven primarily by restrictive land-use policies and slow approvals. Low-income families have it worse than in other large Midwestern cities.

Chicago households struggle to pay for housing, with low-income families facing an especially tough time.

Most of this problem comes from a shortage in affordable housing and poor policies to combat this shortage. Illinois was shy 113,000 units in 2021, according to a recent research report by Up for Growth.

Housing is unaffordable when it costs more than 30% of a household’s income, according to federal standards. In Chicago, nearly 43% of households have trouble with the rent or mortgage – more than double the raw number of people struggling in any other big Midwestern city.

But some Chicagoans have it even worse. Over 240,000 Chicago households pay over half their income for housing. That’s a rate of 22.64%, the second highest among large Midwestern cities and just behind Detroit.

Low-income households typically are hurt the most by increasing housing costs. Among households making under $35,000, over 66% pay more than half their income for housing. Almost 200,000 of about 300,000 low-income Chicago households pay over half of their income for housing, the highest rate among large Midwestern cities.

Low-income Chicagoans struggle whether they rent or own, with 65.1% of low-income homeowners and 66.6% of low-income renters paying more than half of their income for housing. Chicago is second among Midwestern cities in both categories.

Topping those two measures are low-income Minneapolis homeowners at 70.6% and Detroit renters at 77.3%, but both are a fraction of the raw numbers in Chicago. To combat their housing crisis, Minneapolis has gradually enacted regulatory reforms that continue to push prices down.

Affordable housing is extremely important, especially to low-income households. When you have little to begin with, high housing costs can force tough choices about basic needs such as food, transportation and child care.

Chicago can help its most vulnerable, and do it without the kind of big tax increase taxpayers rejected in March.

The most promising reforms center on making it easier to build more, and more varied types of housing. Reforming restrictions on granny flats and other alternative housing units on single-family lots would create more low-cost housing. Between May 2021 and the end of 2022, Chicago approved fewer than 500 of these units.

Chicago also needs to severely cut back on land-use regulations: over 40% of Chicago’s land is reserved for only single-family housing. Allowing single-family property owners to build additional units, along with duplexes, triplexes, etc. in these areas, will greatly boost the affordable housing supply.

Finally, shortening the approval time for new developments would produce more housing in less time.  About 17% of zoning licenses in Chicago were not being processed and were sent back because of insufficient information. Over 1,300 buildings required more than three different inspections per year, according to a Harvard Kennedy School of Business study. That’s a recipe for less housing.

Chicago leaders have Mayor Brandon Johnson’s “Cut the Tape” proposal with a number of solid solutions proposed, but they need to be put into action. Much more work needs to be done so housing costs are brought down to reasonable levels.